Risk in the portfolio of large syndicated bank loans declined a bit in the past year but still remains elevated, according to a joint annual report from three U.S. bank regulatory agencies released Wednesday. The high level of credit risk "stems mostly from distressed borrowers in the oil and gas sector," and other industry sector borrowers exhibiting excessive leverage," the report said. Since 2014, the decline in oil prices has led to a significant increase in adversely rated credits, the report said. The agencies noted $317 billion of leverage loans are in the lowest pass rating category "raising additional supervisory concerns should economic conditions decline."
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